Future outlook enhanced by Google Trends

The monthly Commonwealth Bank Household Spending Intentions (HSI) series, data to end-November, shows a very modest response to the policy stimulus, both monetary and fiscal, that has been applied to the economy through 2019. The weakness in the HSI indicators is centred on spending on ‘goods’, which continues to track sideways at low levels. In contrast, spending on ‘experiences’ is generally trending higher. Data for November showed a pause in the sharp upward trend in Home Buying intentions, but still at high levels. Retail sales spending intentions are bouncing around at low levels – with the recent increase in disposable income finding its way into savings, rather than spending. Travel and Entertainment spending intentions continue to improve slowly – as do Motor Vehicle spending intentions from a low base. Both Health & Fitness and Education spending intentions have turned down recently.

Read summary

Knowing what’s around the corner can keep you one step ahead.  

Whether you are running a business, a policy maker, an investor or one of Australia’s corporate enterprises - insights on shifting consumer spending intentions are critical in planning for the future. Our Household Spending Intentions series combines our spending data, one of Australia’s largest financial data sources, with Google Trends publically available search activity. By connecting actual spending data to intentional data, our analysis provides an early indication of prospective spending trends across seven key sectors.  This series covers about 55% of the total household spend. Future releases will look to expand our coverage to the remaining spending components.

Home Buying
Spending Intentions

  • There was a pause in the sharp uptrend in home buying intentions in November
  • Nevertheless, the home buying HSI remains close to the record highs seen in H1 2017
  • And HSI readings point to an ongoing pick up in dwelling prices

Spending Intentions

  • Retail spending intentions are bouncing around at present but seem stuck below the zero line.  Intentions are yet to deliver the decisive break that would signal better times for consumer activity and the economy more broadly
  • Tax cuts have improved household ability of spend. But the boost to disposable income has ended up in cash savings
  • One potential trigger for unlocking these savings would be a positive wealth effect from rising dwelling prices
  • The retail HSI tends to follow dwelling prices with a two-month lag

Motor Vehicles
Spending Intentions

  • Motor vehicle purchase intentions are little changed – they remain deep in negative territory
  • As with retail spending intentions, however, the turn in dwelling prices is generating a positive wealth effect that should eventually help lift spending intentions

Spending Intentions

  • Entertainment spending intentions are rising quickly after a lengthy period where spending intentions were falling/flat

Spending Intentions

  • Travel spending intentions are inching higher but are yet to re-enter positive territory
  • The lower AUD may be discouraging offshore travel. The Q3 CPI showed that over the past year the cost of an overseas holiday has increased by 5.8% while domestic holiday costs are up only 0.7%

Spending Intentions

  • Education spending intentions slowed a little in November but are essentially tracking sideways at an elevated rate of growth

Health and Fitness
Spending Intentions

  • Intentions to spend on health & fitness have levelled out
  • But the levelling is occurring at a solid rate of growth
  • The trends indicate households are willing to allocate scarce disposable income to driving health & fitness spending with little impact from the vagaries of the economic cycle

Enhanced by Google Trends

Things you should know

This report provides general market-related information, and is not intended to be an investment research report. This report has been prepared without taking into account your objectives, financial situation (including the capacity to bear loss), knowledge, experience or needs. It is not to be construed as a solicitation or an offer to buy or sell any securities or financial instruments, or as a recommendation and/or investment advice. Before acting on the information in this report, you should consider the appropriateness and suitability of the information to your own objectives, financial situation and needs, and, if necessary seek appropriate professional or financial advice, including tax and legal advice.

Commonwealth Bank of Australia (the “Bank”) believes that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its compilation, but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made in this report. Any opinions, conclusions or recommendations set forth in this report are subject to change without notice and may differ or be contrary to the opinions, conclusions or recommendations expressed elsewhere by the Bank or any member of the Commonwealth Bank of Australia group of companies. Any valuations, projections and forecasts contained are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Different assumptions and estimates could result in materially different results. The Bank does not represent or warrant that any of these valuations, projections or forecasts, or any of the underlying assumptions or estimates, will be met. Past performance is not a reliable indicator of future performance.

Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. The Bank takes reasonable steps to ensure that its proprietary data used is accurate and any opinions, conclusions or recommendations are reasonably held or made as at the time of compilation of this report. As the statistics take into account only the Bank’s data, no representation or warranty is made as to the completeness of the data and it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement.

The CBA Spotlight Series does not contain any recommendations but provides commentary on Australian macroeconomic themes. As the CBA Spotlight reports are based on CBA Data, the IB&M Portfolio & Client Analytics (PCA) team provide raw data that may directly or indirectly relate to the themes that have been selected for coverage by the Chief Economist. The PCA team are subject to the same personal conflict requirements and trading restrictions as research, and individuals are wall-crossed per report. CBA Spotlight reports may be viewed in advance of publication by CBA Marketing and Communications in order to produce infographics. Reports are only provided to Marketing and Communications team members under strict wallcrossing and during this period their individual trading is monitored.

We are under no obligation to, and do not, update or keep current the information contained in this report. Neither the Bank nor any of its affiliates or subsidiaries accepts liability for any loss or damage arising out of the use of all or any part of this report. All material presented in this report, unless specifically indicated otherwise, is under copyright of the Bank. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior written permission of the Bank.

In the case of certain products, the Bank or one of its related bodies corporate is or may be the only market maker. Financial markets products have an element of risk. The level of risk varies depending on a product’s specific attributes and how it is used. The Bank will enter into transactions on the understanding that the customer has: made his/her own independent decision to enter into the transaction; determined that the transaction is appropriate; ensured he/she has the knowledge to evaluate and capacity to accept the terms, conditions and risks; and is not relying on any communication (including this report) from the Bank as advice.

This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or that would subject any entity within the Commonwealth Bank group of companies to any registration or licensing requirement within such jurisdiction.

Unless agreed separately, we do not charge any fees for any information provided in this report. You may be charged fees in relation to the financial products or other services the Bank provides, these are set out in the relevant Financial Services Guide (“FSG”), relevant “PDS”, relevant Terms & Conditions, and/or relevant contract. If you have a complaint, the Bank’s dispute resolution process can be accessed on 13 22 21 when in Australia, and +61 2 9841 7000 from overseas. Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and its subsidiaries, including Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec), Commonwealth Australia Securities LLC and CBA Europe Ltd., are domestic or foreign entities. Global Markets Research is a business division of the Commonwealth Bank group of companies.